[October 29, 2009] ATG Reports Third Quarter 2009 Financial Results Tweet CAMBRIDGE, Mass. --(Business Wire)-- Art Technology Group (News - Alert), Inc. (NASDAQ: ARTG), the premier provider of commerce solutions, today reported financial results for the third quarter ended September 30, 2009. Revenue for the third quarter of 2009 grew to $43.4 million, a 6% increase over third quarter 2008 revenue of $40.8 million. "Revenue, bookings and net income growth exceeded our expectations in the third quarter," stated Bob Burke, ATG's president and CEO. "Looking ahead to the fourth quarter, we are very excited about the level of sales activity and demand we're seeing in the market for our commerce solutions and expect a strong finish to the year." Product license bookings, a non-GAAP measure which the company defines as the sale of perpetual software licenses, grew 9% to $10.4 million for the third quarter from $9.5 million in the year ago quarter. Approximately 41% of product license bookings in the third quarter were deferred and will be recognized ratably. Net income in accordance with GAAP for the third quarter of 2009 increased to $4.0 million, or $0.03 per diluted share compared with net income of $786 thousand, or $0.01 per diluted share, in the third quarter of 2008. Non-GAAP net income increased to $5.5 million for the third quarter of 2009, or $0.04 per diluted share compared with non-GAAP net income of $3.9 million, or $0.03 per diluted share for the third quarter of 2008. Cash flow from operations for the third quarter of 2009 was $9.9 million. At September 30, 2009, ATG had $78.1 million in cash, cash equivalents, and marketable securities. The company's Board of Directors has approved a new stock repurchase program that authorizes the repurchase of up to $25 million of ATG's common stock. This new authorization is in addition to the remaining $3.9 million under the Company's existing $20 million repurchase program authorized in April of 2007. The stock repurchase program authorizes the company to repurchase shares, in the open market or privately negotiated transactions, at times and prices considered appropriate by the company depending upon prevailing market conditions and other corporate considerations. As of October 27, 2009, ATG had approximately 127.0 million shares outstanding. "We have executed extremely well in 2009 - consistently increasing year over year revenue while containing our costs," stated Julie Bradley, ATG's senior vice president and CFO. "We expect strong demand for our solutions to continue driving bookings, revenue and profit growth for the second half of 2009 as compared to the second half of 2008." Quarterly Conference Call ATG management will discuss the company's third quarter 2009 financial results, recent highlights, and business outlook on its quarterly conference call for investors at 10:00 a.m. ET today. The conference call will be broadcast live over the Internet. Investors interested in listening to the webcast should log on to the "Investors" section of the ATG website, www.atg.com. The live conference call also can be accessed by dialing (866) 723-3575 (or (706) 634-8872 for international calls) and using conference ID No. 33150677. A replay of the call will be available on the company's website later in the day. About ATG A trusted, global specialist in e-commerce, ATG (Art Technology Group, Inc., NASDAQ: ARTG) has spent the last decade focused on helping the world's premier brands maximize the success of their online businesses. ATG Commerce is the commerce platform and business user application solution top-rated by industry analysts for powering highly personalized, efficient and effective e-commerce sites. ATG's platform-neutral optimization services can be easily added to any Web site to increase conversions and reduce abandonment. These services include ATG Recommendations and ATG's eStara (News - Alert) Click to Call and Click to Chat services. The company is headquartered in Cambridge, Massachusetts, with additional locations throughout North America and Europe. For more information, please visit http://www.atg.com. © 2009 Art Technology Group, Inc. ATG and Art Technology Group are registered trademarks. All other product names, service marks, and trademarks mentioned herein are trademarks of their respective owners. ART TECHNOLOGY GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (UNAUDITED)           September 30, June 30, December 31, September 30,   2009   2009   2008   2008 ASSETS   Current Assets: Cash, cash equivalents and marketable securities (including restricted cash of $ 0 at September 30, 2009 and June 30, 2009 and $1,669 at December 31, 2008 and September 30, 2008) $ 73,972 $ 71,335 $ 60,983 $ 58,232 Accounts receivable, net 31,850 39,155 35,109 35,779 Deferred costs, current 1,126 876 924 931 Deferred tax assets 534 560 560 - Prepaid expenses and other current assets   2,910   3,266   3,814   3,411   Total current assets 110,392 115,192 101,390 98,353   Property and equipment, net 10,168 10,500 10,098 9,583 Intangible assets, net 4,991 5,917 7,770 8,854 Deferred costs, less current portion 1,391 1,884 1,984 2,146 Marketable securities (including restricted cash of $419 as of September 30, 2009, June 30, 2009, December 31, 2008 and September 30, 2008) 4,129 419 419 419 Other assets 1,483 1,457 1,423 1,625 Goodwill   65,683   65,683   65,683   67,692   Total assets $ 198,237 $ 201,052 $ 188,767 $ 188,672     LIABILITIES AND STOCKHOLDERS' EQUITY   Current Liabilities: Accounts payable $ 4,245 $ 5,229 $ 2,958 $ 3,648 Accrued expenses 16,203 15,398 18,875 18,830 Deferred revenue, current portion 40,025 41,765 38,782 41,401 Accrued restructuring   -   -   146   371   Total current liabilities 60,473 62,392 60,761 64,250   Other liabilities 249 1,775 1,775 498 Deferred revenue, less current portion 9,956 13,046 15,285 11,344   Stockholders' equity   127,559   123,839   110,946   112,580   Total liabilities and stockholders' equity $ 198,237 $ 201,052 $ 188,767 $ 188,672 ART TECHNOLOGY GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (UNAUDITED)             Three months ended Nine months ended September 30, June 30, September 30, September 30, September 30,   2009     2009   2008     2009     2008   Revenue: Product licenses $ 10,890 $ 13,576 $ 10,764 $ 37,396 $ 32,321 Recurring services 24,904 24,028 23,446 72,035 67,335 Professional and education services   7,587     6,823   6,584     20,288     19,588     Total revenue 43,381 44,427 40,794 129,719 119,244   Cost of Revenue: Product licenses 399 457 539 1,246 1,445 Recurring services 9,393 8,722 8,611 27,012 25,458 Professional and education services   6,029     5,505   6,393     16,836     19,802     Total cost of revenue   15,821     14,684   15,543     45,094     46,705     Gross Profit 27,560 29,743 25,251 84,625 72,539   Operating Expenses: Research and development 7,599 7,663 7,660 22,732 22,054 Sales and marketing 12,503 12,541 12,282 37,332 36,975 General and administrative   4,831     4,670   4,890     13,990     14,082     Total operating expenses   24,933     24,874   24,832     74,054     73,111     Income (loss) from operations 2,627 4,869 419 10,571 (572 ) Interest and other income (expense), net   (314 )   339   232     236     1,100     Income before provision for income taxes 2,313 5,208 651 10,807 528 Provision (benefit) for income taxes   (1,650 )   588   (135 )   (750 )   236   Net income $ 3,963   $ 4,620 $ 786   $ 11,557   $ 292     Basic net income per share $ 0.03   $ 0.04 $ 0.01   $ 0.09   $ 0.00     Diluted net income per share $ 0.03   $ 0.03 $ 0.01   $ 0.09   $ 0.00     Basic weighted average common shares outstanding   127,224     126,877   129,219     126,742     128,821     Diluted weighted average common shares outstanding   134,736     133,111   135,697     132,409     134,934   Art Technology Group, Inc. Condensed Consolidated Statements of Cash Flows (In thousands) (UNAUDITED)           Three months ended Nine months ended September 30, June 30, September 30, September 30, September 30,   2009     2009     2008     2009     2008     Cash Flows from Operating Activities: Net income $ 3,963 $ 4,620 $ 786 $ 11,557 $ 292 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,149 2,417 2,299 6,829 6,518 Non-cash stock-based compensation expense 2,463 2,402 1,993 6,820 5,824 Non-cash tax benefit (1,871 ) - - (1,871 ) - Net changes in operating assets and liabilities   3,237     (4,481 )   3,029     (345 )   9,846     Net cash provided by operating activities 9,941 4,958 8,107 22,990 22,480   Cash Flows from Investing Activities: Purchases of marketable securities (19,433 ) (6,925 ) (2,612 ) (28,287 ) (17,225 ) Maturities of marketable securities 5,400 4,082 4,892 14,725 22,492 Purchases of property and equipment (978 ) (2,313 ) (2,220 ) (4,620 ) (5,612 ) Collateralization of letters of credit - - - - (2,088 ) Payment of acquisition costs, net of cash acquired   -     -     -     -     (9,522 )   Net cash (used in) provided by investing activities (15,011 ) (5,156 ) 60 (18,182 ) (11,955 )   Cash Flows from Financing Activities: Proceeds from exercise of stock options 915 364 951 1,428 1,608 Proceeds from employee stock purchase plan 279 276 238 797 754 Repurchase of common stock (4,265 ) - - (4,265 ) (1,479 ) Payment of employee restricted stock tax withholdings   (45 )   (445 )   (29 )   (873 )   (505 )   Net cash (used in) provided by financing activities (3,116 ) 195 1,160 (2,913 ) 378   Effect of foreign exchange rate changes on cash and cash equivalents   388     1,018     (823 )   1,130     (721 ) Net (decrease) increase in cash and cash equivalents (7,798 ) 1,015 8,504 3,025 10,182 Cash and cash equivalents, beginning of period   58,236     57,221     36,097     47,413     34,419     Cash and cash equivalents, end of period $ 50,438   $ 58,236     44,601   $ 50,438   $ 44,601   ART TECHNOLOGY GROUP, INC. STATEMENTS OF OPERATIONS DATA (In thousands) (UNAUDITED)             Three months ended Nine months ended September 30, June 30, September 30, September 30, September 30,   2009   2009   2008   2009   2008 Equity-Related Compensation:   Cost of revenue $ 498 $ 488 $ 400 $ 1,396 $ 1,145 Research and development 435 432 416 1,237 1,153 Sales and marketing 653 609 510 1,774 1,688 General and administrative   877   873   667   2,413   1,838   Total equity-related compensation $ 2,463 $ 2,402 $ 1,993 $ 6,820 $ 5,824   Depreciation and Amortization:   Depreciation Cost of revenue $ 746 $ 913 $ 713 $ 2,474 $ 1,950 Research and development 259 301 275 829 711 Sales and marketing 152 192 155 520 414 General and administrative   65   85   72   227   219 $ 1,222 $ 1,491 $ 1,215 $ 4,050 $ 3,294   Amortization Cost of revenue $ 401 $ 399 $ 406 1,200 1,272 Research and development - - 81 - 162 Sales and marketing 526 527 597 1,579 1,790 General and administrative   -   -   -   -   - $ 927 $ 926 $ 1,084 $ 2,779 $ 3,224   Total depreciation and amortization $ 2,149 $ 2,417 $ 2,299 $ 6,829 $ 6,518   Capital Expenditures:   Purchases of property and equipment $ 978 $ 2,313 $ 2,220 $ 4,620 $ 5,612 RECONCILIATION OF GAAP TO NON-GAAP NET (News - Alert) INCOME (In thousands, except per share data) (UNAUDITED)           Three months ended Nine months ended September 30, June 30, September 30, September 30, September 30,   2009     2009     2008     2009     2008     Net income, GAAP $ 3,963 $ 4,620 $ 786 $ 11,557 $ 292   Amortization of acquired intangibles 927 926 1,084 2,779 3,224 Equity-related compensation 2,463 2,402 1,993 6,820 5,824 Tax adjustments (1,871 ) - - (1,871 ) -             Net income (non-GAAP) $ 5,482   $ 7,948   $ 3,863   $ 19,285   $ 9,340     Net income (non-GAAP) per share:   Basic $ 0.04   $ 0.06   $ 0.03   $ 0.15   $ 0.07   Diluted $ 0.04   $ 0.06   $ 0.03   $ 0.15   $ 0.07     Shares used in per share calculations:   Basic   127,224     126,877     129,219     126,742     128,821   Diluted   134,736     133,111     135,697     132,409     134,934         Reconciliation of Product License Bookings (In thousands) (UNAUDITED)   Three months ended Nine months ended September 30, June 30, September 30, September 30, September 30,   2009     2009     2008     2009     2008     Product license bookings $ 10,436 $ 16,612 $ 9,486 $ 39,396 $ 36,627   Product license bookings deferred (4,321 ) (7,292 ) (4,078 ) (16,299 ) (19,441 )   Product license deferred revenue recognized   4,775     4,256     5,356     14,299     15,135     Product license revenue $ 10,890   $ 13,576   $ 10,764   $ 37,396   $ 32,321   Use of Non-GAAP Financial Measures ATG is providing the non-GAAP historical and forward-looking financial measures presented above as the company believes that these figures are helpful in allowing individuals to better assess the ongoing nature of ATG's core operations. A "non-GAAP financial measure" is a numerical measure of a company's historical or future financial performance that excludes amounts that are included in the most directly comparable measure calculated and presented in the GAAP statement of operations. Net income (non-GAAP) and net income per share (non-GAAP), as we present them in the financial data included in this press release, have been normalized to exclude the net effects of amortization of acquired intangible assets, equity-related compensation, and related tax adjustments. Management believes that these normalized non-GAAP financial measures excluding these items better reflect the company's operating performance as these non-GAAP figures exclude the effects of non-recurring or non-cash expenses. Management believes that these charges are not necessarily representative of underlying trends in the company's performance and their exclusion provides investors with additional information to compare the company's results over multiple periods. ATG considers "product license bookings," a non-GAAP financial measure which the company defines as product license revenue recognized plus net change in deferred license revenue during any given period, to be an important indicator of growth in its software license business, as its business increasingly evolves toward a recurring, ratable revenue model. The company uses these non-GAAP financial measures internally to focus management on period-to-period changes in the company's core business. Therefore, the company believes that this information is meaningful in addition to the information contained in the GAAP presentation of financial information. The presentation of this additional non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. In accordance with the requirements of Regulation G issued by the Securities and Exchange Commission, the tables above present the most directly comparable GAAP financial measure and reconcile non-GAAP net income and product license bookings to the comparable GAAP measures. ATG Statement Under Private Securities Litigation Reform Act This press release contains forward-looking statements about the company's estimated revenue and earnings. These statements involve known and unknown risks and uncertainties that may cause ATG's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. These risks include the effect of weakened or weakening economic conditions or perceived conditions on the level of spending by customers and prospective customers for ATG's software and services; financial and other effects of cost control measures; quarterly fluctuations in ATG's revenues or other operating results; customization and deployment delays or errors associated with ATG's products; the risk of longer sales cycles for ATG's products and ATG's ability to conclude sales based on purchasing decisions that are delayed; satisfaction levels of customers regarding the implementation and performance of ATG's products; ATG's need to maintain, enhance, and leverage business relationships with resellers and other parties who may be affected by changes in the economic climate; ATG's ability to attract and maintain qualified executives and other personnel and to motivate employees; activities by ATG and others related to the protection of intellectual property; potential adverse financial and other effects of litigation (including intellectual property infringement claims) and the release of competitive products and other activities by competitors. Further details on these risks are set forth in ATG's filings with the Securities and Exchange Commission (SEC (News - Alert)), including the company's annual report on Form 10-K for the period ended December 31, 2008 and its quarterly report on Form 10-Q for the period ended June 30, 2009, as filed with the SEC. These filings are available free of charge on a website maintained by the SEC at http://www.sec.gov. [ Back To TMCnet.com's Homepage ]